US stocks opened lower today as investor sentiment remained cautious amid ongoing economic uncertainty. The dollar continued its upward momentum, testing the 102 level, while the 10-year US Treasury yield also rose, firmly holding above 3.8%. Forward swaps are currently pricing in more than a 30% chance of a 50bps interest rate cut in November, reflecting expectations of further easing in the Fed's ongoing rate cut cycle, down from 60% earlier. We anticipate two more rate cuts over the next three Federal Reserve meetings, with the highest likelihood being a 25bps cut in December, followed by a possibly larger 50bps reduction in January 2024.
The base metals market sold off today, offsetting yesterday's gains. In line with our yesterday's comment, the upside is being exhausted as markets are digesting China's economic reality, prompting prices to mean revert. We expect prices to soften slightly in the coming days. However, there is little impetus in the market to breach the July lows, and prices are likely to remain elevated. In the meantime, copper weakened back below the $10,000/t level to $9,866/t. Aluminium softened but remained above the $2,600/t level. The rest of the complex followed suit, with nickel weakening back to $17,589/t.
The strong dollar continued to weigh on gold prices, with the precious metal trading lower at $2,648/oz. After showing a strong performance in yesterday's session, silver softened slightly, trading at $31.7/oz. Meanwhile, oil prices extended their upward trend, supported by ongoing concerns over the Middle Eastern conflict. WTI and Brent crude were trading at $73.0/bbl and $76.6/bbl, respectively, as the geopolitical tensions are expected to keep the market tight in the next few days.
All price data is from 03.10.2024 as of 17:30
